Industrial sector leads the way for region's entrepreneurs

A new report has shown that the industrial sector is leading the way for North East entrepreneurs, accounting for half of all entrepreneurial activity.

The second Barclays Entrepreneurs Index report has indicated that the region’s industrial sector is responsible for a 27% growth of companies with shares changing hands.

Amongst all regions in the UK and Ireland, the North East saw the lowest rise in activity in companies with shares changing hand, with London enjoying the largest upturn in the number of companies with shares changing hands

The most dramatic rise in entrepreneurship was in the finance sector which enjoyed a 150% growth in the numbers of companies with shares changing hands.

The report described a slight increase of 2% in overall entrepreneurial activity in the North East in the latter half of 2012.

According to the Entrepreneurs Index, 323 growing companies in the North East had shareholder changes in the second half of 2012, compared to 318 in the second half of 2011.

However, the report also reveals a fall in the financial health of companies with shares changing hands in the North East.

The average profit of these companies in the second half of 2012 was £1.4m, down by 26% year on year from £1.9m, and below the national average of £2m.

The technology sector saw a 46% increase in the number of companies with shares changing hands from the second half of 2011 to the second half of 2012.

However, this figure represents just 7% of all companies with shares changing hands.

Ross Smith, director of Policy at the North East Chamber of Commerce said: “We are currently seeing a very successful programme of start-up activity in the technology sector, with a recent business exit resulting in Teesside’s first technology multi-millionaire being created.”

The Barclays Entrepreneurs Index is the second in an ongoing series, which examines shareholder changes of growing businesses with turnovers of £5m-£200 million.

Taking data from Companies House, the report works on the basis that the driving force behind a partial or full change of shareholding in a growing company is likely to be a liquidity event, triggered by individuals selling or transferring their stakes in businesses.

Andrew Miller, director, Barclays Wealth and Investment Management in Newcastle, said: “Since our inaugural Entrepreneurs Index report last autumn, we have watched with interest how the picture for business activity in the North East, as well as the whole of UK and Ireland, has shifted.

“Despite the relatively slow growth in entrepreneurial activity in the region, it is encouraging to see that active companies have shown not only resilience in the face of instability, but even growth in certain sectors.

“The resurgence of traditional industries, and prosperity for younger sectors such as technology, as well as reinvestment made by entrepreneurs post-exit, is further proof that entrepreneurs are the engine room of the British economy.”